When doctors move: Malpractice & tail insurance considerations

When moving to a new state, doctors could be in for sticker shock when it comes to malpractice and tail coverages.

Max Schloemann, founder of MEDPLI, tells PropertyCasualty360.com: “Many times if the doctor is moving from the Northeast it (insurance costs) is less expensive in Florida, but if they are coming from Texas or California they will likely see an increase in price for coverage.” (Credit: Gorodenkoff/Shutterstock.com)

When doctors move to another state, the accompanying rate change for malpractice insurance, as well as out-of-pocket cost for tail insurance, can catch some doctors off guard. Especially if a previous employer covered premiums, according to Max Schloemann, founder of MEDPLI Insurance Services.

For example, an orthopedic surgeon moving from Dallas to Miami can expect to see a significant rate increase, he tells PropertyCasualty360.com.

“Miami is a highly litigious area, so doctors can expect to pay more for coverage,” Schloemann says, explaining Florida is a moderate to high malpractice insurance cost state. “Many times if the doctor is moving from the Northeast it is less expensive in Florida, but if they are coming from Texas or California they will likely see an increase in price for coverage.”

In addition to the number of lawsuits, the frequency of malpractice insurance claims and the severity of those claims all contribute to higher rates.

“Each time a lawsuit is filed it will create some cost that will get passed onto insureds. That is where a lot of the rate is coming from,” he said, adding defense and claims costs are both rising.

Covering their tail

When a doctor moves out of state or changes employers, they might be tasked with securing their own tail insurance coverage to protect them from future litigation from past actions.

“I try to educate people on the front end that if they are going to be moving jobs to find out who will be paying for tail coverage. Sometimes a group will pay a portion of the tail,” Schloemann says. “The tail is based on 200-250% of the expiring premium, but that doesn’t mean a lot if you aren’t paying the premium because it is part of an employment package. Doctors might not fully realize that when changing jobs, and that is a big expense and something that can be really eye opening.”

He says for doctors that might be considering a job change, contacting a broker to get an estimate of future tail costs is vital.

“Those costs might change with time, but they can at least give an estimate based on the individual’s case. That can help them plan for those expenses,” Schloemann says.

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